Taiwan semiconductor sector to grow 1.9 percent

2015/11/11

Taiwan’s semiconductor sector is forecast to grow 1.9 percent to NT$2.24 trillion (US$68.39 billion) this year on the strength of the country’s world-leading contract foundry services, according to the Industrial Economics and Knowledge Center.

In its latest industry analysis released Nov. 9 in Taipei City, the local market intelligence organization said while the estimate is no match for the double-digit growth seen in the previous two years, it is in sharp contrast with the 0.8 percent decline projected for the sector worldwide by U.S.-based information technology research firm Gartner Inc.

According to IEK General Director Stephen Su, weak demand for smart devices amid uncertainties over the global economy took a toll on the local industry during the first half of the year. “But as international IT firms ran down their inventories in the third quarter, the situation is starting to turn around.”

In terms of performance by individual industries, integrated circuit manufacturing is forecast to top the list with NT$1.23 trillion, up 4.5 percent from last year.

Su attributed the strong showing to a 10.1 percent increase in contract foundry services, which passed the NT$1 trillion threshold for the first time. “It will also offset the projected 15.1 percent fall in memory chip production, which will drop to NT$220 billion for the year.”

IC design will come in second at NT$576.9 billion, inching up just 0.1 percent, followed by IC packing services at NT$310.2 billion, down 1.8 percent, and IC testing services at NT$131.1 billion, 4.9 percent lower than last year, according to the IEK report.

Su said the local semiconductor sector is expected to gain momentum from the first quarter of next year due to the improved outlook for the global economy, with major growth drivers including auto electronics, industrial applications, smartphones, ultra-thin notebooks and wearable devices.

But Taiwan will also face new challenges going forward, especially the changing dynamics of global supply chains and rising competition from mainland China.

In the report, local packaging and testing firms, which account for half of the global market, are urged to pursue mergers and acquisitions in order to maintain their position, while IC design houses are advised to promote strategic alliances in research and development.

Compared with the global average of 1.9 percent for next year, the IEK expects Taiwan’s semiconductor sector to gain 4.1 percent to NT$2.34 trillion due in large part to projected growth of 9.9 percent in the local contract foundry services industry.

Source: Taiwan Today (http://taiwantoday.tw/ct.asp?xItem=238694&ctNode=2194&mp=9)